Which EDI Applications Are Right For You?

With its transformative power to revolutionize communication and operations, it’s no wonder the world’s leading companies like Amazon and Walmart mandate their suppliers to use EDI. See how Betco was forced to adapt fast when they started supplying Office Depot.

EDI is a highly versatile platform with many applications within organizations and across sectors. In this article, we explore the broad spectrum of applications, asking, “Which EDI Applications Are Right For You?” Read on to find out.

The Basics of EDI

EDI may seem complex at first glance, but it's pretty straightforward once you understand the fundamentals.

It provides a standardized way for companies to communicate critical business information electronically rather than through paper-based methods. It translates data from one company's computer system into a format that can be read and digested by another company's system. This interconnection and automation removes the need for manual data entry and reduces human error.

Some key benefits of EDI include:

• Faster transaction speed: Sending and receiving data electronically is much quicker than mailing paper documents. This boosts workflow efficiency.
• Lower operating costs: EDI reduces paperwork, postage, faxing, and other manual processes. This reduces overhead costs.
• Improved data accuracy: Doing away with paper-based data entry means fewer errors. Data integrity is improved.
• Better tracking & compliance: Audit trails are more accessible with digital records. This supports improved compliance.
• Enhanced customer service: Faster transactions mean better customer service. Issues can be resolved more quickly.

What Documents Do Companies Interchange with EDI

There are hundreds of EDI document types used across various industries. These vary from everyday documents like purchase orders and invoices to the more unusual (see EDI 103 for Abandoned Property Filings or EDI 113 for Election Campaign and Lobbyist Reporting.)

The EDI documents you encounter will vary depending on the specific sector or nature of your business, but here are eight of the most common types:

Purchase Order (EDI 850) and Invoice (EDI 810): Used by a buyer to request goods or services from a supplier / sent by a supplier to request payment for goods or services delivered. Both remove the need for physical creation and dispatch of paper documents, whether through fax, mail, or email.

Purchase Order Acknowledgment (EDI 855): Used by suppliers to confirm the receipt of a purchase order (EDI 850). It may accept, reject, or suggest changes to the order.

Advance Ship Notice (EDI 856): Used to detail the contents of a shipment–including items, quantities, and packaging–to a trading partner. It's commonly used in retail and manufacturing and is also known as an EDI ASN.

Payment Order/Remittance Advice (EDI 820): Used alongside an electronic transfer of funds to pay for goods, insurance premiums, or other transactions. The actual funds transfer is often coordinated through the Automated Clearinghouse (ACH) system.

Warehouse Shipping Order (EDI 940): Used to instruct remote warehouses to ship orders. It helps prevent over-stocking.

Inventory Inquiry/Advice (EDI 846): Used to communicate inventory information between trading partners.

Transportation Carrier Shipment Status Message (EDI 214): Used by transportation carriers to provide shippers and consignees with shipment statuses.

Functional Acknowledgment (EDI 997): Sent in response to other EDI transactions received. It confirms your document has arrived and was processed by the recipient but doesn’t indicate the trading partner agrees with the contents.

Top EDI Applications in Business

Supply Chain Management

EDI improves supply chain management by facilitating real-time, automated communication between suppliers, manufacturers, and distributors. It allows parties to seamlessly share information like purchase orders, invoices, shipment notices, and inventory levels without human data entry or paperwork.

Net result: EDI elevates supply chain efficiency, accuracy, and responsiveness through automated, integrated data sharing between supply chain partners.

Inventory Control and Management

EDI is critical for effective inventory management, providing real-time visibility into stock levels across the supply chain. It automates the reorder process by triggering orders based on supplier inventory data, preventing overstocking or stockouts that can occur with manual inventory tracking.

Net result: EDI enhances inventory control by enabling data-driven reorder points and giving an accurate, up-to-date view of stock levels to help reduce costs and ensure availability.

Order Processing

EDI platforms optimize order processing and accelerate the order-to-cash cycle by automating order confirmation, invoicing, and other paperwork. When orders are placed via EDI, information flows directly into relevant business systems like ERP–without human intervention. See how one of the largest distributors of electrical equipment has integrated EDI and ERP.

Net result: EDI speeds up order processing by reducing manual steps, costly errors, and delays–enabling faster sales cycles, rapid shipping, and a superior customer experience.

Shipping and Logistics

EDI improves shipping and logistics by digitizing and standardizing electronic documentation like bills of lading, shipment status notices, and delivery confirmations. Carriers, warehouses, and logistics providers can seamlessly exchange information to coordinate the movement of goods through the supply chain.

Net result: EDI improves coordination and reduces costs in shipping and logistics through faster, more accurate data interchange between transportation providers.

Healthcare (Medical Claims Processing)

EDI enables seamless transmission of medical claims, benefits enrollment, and other critical data between healthcare providers, insurance payers, and patients. EDI platforms, like 1 EDI Source, ensure healthcare data is exchanged securely and comply with regulations like HIPAA and FDA requirements. 

Net result: EDI improves accuracy, efficiency, and compliance in healthcare by automating data interchange between medical stakeholders.

Retail and eCommerce

EDI is critical for retail and eCommerce businesses, automating transactions between merchants, suppliers, and customers. It seamlessly exchanges product information, pricing updates, purchase orders, and order status data between retail systems and partner databases.

Net result: EDI keeps online and physical stores stocked and customers informed by automating data sharing with suppliers and order management systems.

Manufacturing

Manufacturers use EDI to boost production workflows, raw material inventories, and supplier coordination. It enables the automated exchange of manufacturing schedules, material requirements, inventory levels, and quality control data between factory systems, suppliers, and partners.

Net result: EDI increases manufacturing productivity and supports frictionless operations through integrated, automated data exchange across the production ecosystem.

In Conclusion

EDI enables seamless B2B communication and enhanced supply chain visibility. By removing physical paperwork and data entry, errors are reduced, and processes are accelerated. With versatile applications across industries like retail, healthcare, manufacturing, and logistics, EDI streamlines operations, lowers costs, and improves customer satisfaction.

To fully leverage the transformational power of EDI, partnering with the right EDI solutions provider is vital. As a leading EDI services company, 1 EDI Source offers end-to-end support for EDI implementation, integration, and management. Our three decades of expertise will help you maximize the return on investment from all applications of EDI in business. Contact us today.